Markets Pulse

Silver Lake Puts Maiden Dividend on the Horizon

Silver Lake Resources has had a pretty good year: Gold production is up, profits have doubled, and its stock has outpaced Australia’s broader equity market.

But shareholders will have to wait before they can share in some of the spoils, it seems.

The Australian gold producer – soon to join the ranks of companies worth more than 1 billion Australian dollars (US$1.04 billion) through the acquisition of Integra Mining – admits that “on the dividend front, we have not quite made it yet.”

In a speech to Silver Lake’s annual general meeting Friday, Chairman Paul Chapman said the company has decided to keep its cash in its own pockets in order to fund growth. That’s despite a sharp swell in its coffers where cash and cash equivalents more than quadrupled in the year to June 30 at A$68 million.

“We also lacked franking credits and at the end of the day, if you start paying dividends they need to be sustainable,” he told shareholders.

Right now, the company has 2014 in mind for a maiden “and sustainable” dividend. That will give the company an opportunity to complete construction on its Murchison gold project in Western Australia, where it expects to start production early next year, and finalize its tie-up with Integra.

It’ll be worth the wait, though, Mr. Chapman said. “This [a 2014 dividend] will be positive for all shareholders,” he said, assuring the move will ultimately “broaden our investment appeal.”